Shell's Climate Policy Wins Support, CEO Pay Loses Backing

Royal Dutch Shell (LON:RDSa) plc RDS.A recently held its annual general meeting, where the shareholders gave verdict on the two most debated issues — responsibilities regarding climate changes and chief executive, Ben van Beurden’s pay.

Addressing Climate Changes

Nearly 94.5% of the shareholders agreed with the company’s “wide-ranging and progressive approach” toward energy transition. They voted against a resolution, which could have compelled Shell to commit to firmer carbon-emission reducing objectives.

Last year, a similar resolution drew 6.3% votes in favor. Although the environment activists were hoping to witness an increase in the number, it declined to 5.5%, further showing shareholders’ confidence in the company’s approach toward the matter.

Shell’s Take on Emission: So far, Shell thinks that it is leading the movement against emissions — which incorporates emission from using its own products as well — with a target of slashing half of its carbon footprint by 2050. Moreover, the company already boasts several investments it made in solar facilities, batter-charging points for vehicles, clean technologies and others. The move also diversifies the company’s portfolio.

However, the environmentalists demanded more prominent and ambitious targets from the Anglo-Dutch energy major, which directs more than 90% of its capex toward fossil fuels. They believe that the actions from the company are not sufficient to satisfy the Paris climate Agreement, which sets a goal of keeping the rise in global temperature well below 2°C above pre-industrial levels.

Chief Executive’s Pay

Although Shell won support from its shareholders in 2017 for its remuneration report — which incorporated CEO Ben van Beurden’s pay of nearly €9 million (almost $10 million) — it was not an easy walk this time. While the report witnessed opposition from only 8% voters last year, this year it rose to more than 25%.

Moreover, Institutional Shareholder Services, an advisor of investors regarding corporate governance votes, opposed the payment resolution. They raised the incident in Pakistan, where a road tanker explosion involving a subcontractor of Shell killed more than 200 people, which did not weigh on the executive’s pay.

Price Performance

Headquartered in The Hague, the Netherlands, Shell’s stock has gained 31.7% in the past year, substantially outperforming 21.6% rise of the industry it belongs to.

Zacks Rank and Stocks to Consider

Currently, Shell carries a Zacks Rank #3 (Hold).

Investors interested in the Energy sector can opt for some better-ranked stocks in the same space like Nine Energy Service, Inc. (NYSE:NINE) , Delek US Holdings, Inc. (NYSE:DK) and BP (LON:BP) p.l.c. (NYSE:BP) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Houston, TX-based Nine Energy Service is an onshore service provider. For 2018, its bottom line is likely to be up 181.7%. In the last reported quarter, the company delivered a positive earnings surprise of 28.6%.

Brentwood, TN-based Delek is an energy company. The company’s top line for 2018 is anticipated to improve 35.6% year over year, while its bottom line is expected to increase 159.5%.

London-based BP is an integrated oil major. For 2018, its bottom line is likely to be up 66.5%. In the last four reported quarters, the company delivered a positive average earnings surprise of 29.6%.

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